When governments grant patents:
A) producers earn profits that are substantially higher than would occur in a competitive market.
B) consumers pay a higher price than they would in a competitive market.
C) consumers are likely to pay lower prices than they would in a competitive market.
D) Both A and B are correct.
Ans: D) Both A and B are correct.
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What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce steamed milk, which is used to make lattés, and scientists discovered that coffee prevents heart attacks?
a. Both the equilibrium price and quantity would increase. b. Both the equilibrium price and quantity would decrease. c. The equilibrium price would increase, and the effect on equilibrium quantity would be ambiguous. d. The equilibrium quantity would increase, and the effect on equilibrium price would be ambiguous.
One way to make consumers take a positive externality into account in their demand decision is to:
A. place a tax on the item. B. tax the producers of the item. C. subsidize the purchase of the item. D. None of these statements is true.
A sudden massive reduction in the availability of chocolate will likely cause the price of chocolate to ________, which will ________ the quantity of chocolate demanded by consumers
A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease
Before applying the 35 percent tax rate, firms may deduct
A. employee compensation. B. interest payments. C. depreciation allowances. D. all of these answer options are correct.